Open the flood gates: Why Keystone XL must be built

By in Opinions

Only a few days into his presidency, American President Donald Trump has already taken action on advancing the construction of the long-stalled Keystone XL pipeline expansion. This news has been received with intensely mixed reactions, but should be celebrated as a success for all.

The construction of pipelines has long been intensely contested — with those opposed citing fears of impending environmental catastrophe. Obstacles to development originate from groups who oppose the strive for increased efficiency, safety and — subsequently — standards of living involving fossil fuel resource extraction.

keystone-xl-flickr-shannonpatrick17
People are too quick to lob criticism at the Keystone KL expansion project.

The responsible development and extraction of the world’s fossil fuel resources — while ensuring the simultaneous protection of the environment and human rights — have never been of greater importance to the people of Saskatchewan, Canada and the whole world. The further investment in pipelines as a means of transporting oil is currently our best option.

There is no perfect solution when it comes to the transport of oil resources, but pipelines are the safest and most efficient mode of movement compared to the next best method of rail.

Kenneth P. Green and Taylor Jackson’s 2015 study “Safety in the Transportation of Oil and Gas: Pipelines or Rail?” concluded that shipping oil by pipe was in fact 4.5 times less likely to experience an incident than rail shipments.

From 2003-13, pipelines in Canada experienced 0.049 incidents per thousand barrels of oil equivalents versus 0.227 for rail. As well, only 17 per cent of pipeline incidents occurred in actual pipe, with the remaining incidents occurring in areas such as compressor stations and terminals, where containment is more immediately effective.

Another argument of pipeline opposition is that Canadians should build more refineries instead of pipelines and become energy independent. This simply does not make sense.

Building more refineries is not a viable option due to the economics of energy markets. Per David A. McLellan of Financial Post, Canada already refines 10 per cent more oil than is used domestically, with a refining capacity of 2.65 million barrels per day as of January 2014.

In a sense, we are already energy independent when referring to domestic refining capacity and consumption. Building more refineries would just mean exporting additional refined product.

Higher refining capacity would also require a market to take it. With current infrastructure, this market simply does not exist. Of the roughly four million barrels per day of raw oil that Canada currently extracts, half is exported because there are markets for this unrefined resource in places such as the United States and Asia.

These markets are looking to import and refine oil as they have the refining infrastructure and capacity, but not enough inputs. Canada has an excess of inputs which are readily available for export. In sum, increasing domestic refining capacity would not be a wise investment for any company or government in Canada.

Additional benefits of pipeline expansion will come in the form of employment during the construction phase. Premier Brad Wall estimates approximately 2,200 jobs will be created in Saskatchewan alone, if the pipeline is approved.

Increased value for the shareholders of energy companies will also be a reality as product shipment costs fall. This means all Canadians can benefit financially.

According to the CPP Investment Board, as of Mar. 31, 2016, more than 10 per cent of CPP holdings in Canadian publicly traded equity were in energy, representing over $1 billion in investments. Therefore, to support the success of the energy sector is to support the financial security of all Canadians.

These are only but a handful of reasons that pipelines are not as bad as they are often made out to be. The fact of the matter is that oil and everything derived from it will still be needed in the short term. No one knows when we will become a people who no longer need oil to survive, but it’s likely it’ll take longer than it does to build another pipeline.

Bodan Worobetz

Photo: shannonpatrick17 / Flickr